Market Roundup
- Japan, US agree to honor G7, G20 Forex commitments.
- Bank of Japan’s Kuroda calls yen’s recent rise ‘excessive’, some of rise corrected – Wall Street Journal.
- Japan FinMin Aso to US TsySec Lew – Concerned over one-sided FX moves, excessive-disorderly FX moves bad for economy, Lew agreed excessive volatility undesirable, G20 agreement won’t prevent Japan from FX action if needed, no secret deal in Shanghai to weaken USD, G20 deal not constraint on BoJ NIRP policy.
- Sources - BoJ warming to idea of buying more stock funds.
- BoJ’s negative rates draw new fire from banking sector.
- Policymakers fret as storm clouds gather over world economy.
- IMF Lipton – No dollar accord discussed at Shanghai G20 meeting.
- PBOC DepGov Yi Gang – Does not want big Yuan overshoot.
- PBOC sells net CNY144.8 bln in March.
- China end-March FX deposits $666 bln, end-Feb $655.2 bln.
- China Stats Bureau – Economy steadying but cannot be too optimistic.
- China Q1 GDP +6.7% q/q, as eyed, growth slowest since Q1 ’09, fixed asset investment +10.7, +10.3% eyed, property investment +6.2%.
- China March industrial output +6.8%, retail sales +10.5%, +5.9%, +10.4% eyed.
- China March M2 +13.4% y/y, new CNY loans 1.37 trln/+14.7%, social fin +13.4%.
- Foreign CB US debt holdings -$14.142 bln to $3.243 trln April 13 week, Treasuries -$14.009 bln to $2.938 trln, agencies +$97 mln to $266.663 bln.
- NY Fed – Swaps with foreign CBs $45 mln April 13 week, all with ECB.
- RBA – Fin’l risks in Asia demand for local property, 40% of commercial buys.
Economic Data Ahead
- (0400 ET/0800 GMT) Italy February trade balance – global/EU; last E40 mln, E520 mln surpluses.
- (0430 ET/0830 GNT) UK February construction output, unch m/m, +0.7% y/y eyed; last -0.2%, -0.8%.
- (0500 ET/0900 GMT) EZ February trade balance; last E6.2 bln surplus.
- (0830 ET/1230 GMT) US April NY Fed Empire State mfg index, 2.21 eyed; last 0.62.
- (0915 ET/1315 GMT) US March industrial output, -0.1%/+0.1% m/m eyed; last -0.5%, +0.1%.
- (0915 ET/1315 GMT) US March capacity utilization, 75.4% eyed; last 75.4%.
- (1000 ET/1400 GMT) US April UoM sentiment index – prelim, 92.0 eyed; last 91.0.
Key Events Ahead
- N/A IMF/World Bank, G20 meetings in Washington, DC, press conferences.
- (0605 ET/1005 GMT) UK DMO GBP0.5/1.5/2.0 bln 1/3/6-month treasury bill auctions.
- (1230 ET/1630 GMT) Chicago Fed Evans speaks at Washington, DC seminar.
- (1600 ET/2000 GMT) US Treasury int’l capital flows data (TIC), last $118.4 bln net inflow.
- Saturday IMF/World Bank meetings continue.
- Sunday IMF/World Bank meetings final day.
FX Recap
USD: The dollar rose on Friday, on track for weekly gains as investors awaited a weekend meeting of Group of 20 financial leaders at which currency is likely to be a topic. The dollar index, which tracks the greenback against a basket of rival currencies, added about 0.1 percent to 94.977, up about 0.8 percent for the week.
EUR/USD: The euro edged down about 0.1 percent to $1.1255 from a six-month high of $1.1465 touched on Tuesday, set to shed about 1.3 percent for the week. Intraday bias remains bearish till the time pair holds key resistance at 1.1315. A sustained break above it will drag the parity up towards $1.1402/$1.1469 marks. On the down side, key support level is seen at $1.1159/ $1.1057 marks.
USD/JPY: The Japanese Yen dropped on Friday after major figures from the Chinese economy renewed optimism on the markets and promoted riskier assets. Pair hovers around key resistance at 109.36 marks, pulling well away from a 17-month trough of 107.63 set a few days ago. A sustained close above it tests other resistances at 112.60/114.87/115.96 levels. A daily close below key support level at 108.04 will drag the parity down towards 107.51 marks.
GBP/USD: The Sterling edged down 0.1 percent to $1.4136, moving away back toward its overnight low of $1.4091 plumbed after Bank of England policymakers voted unanimously to keep interest rates at a record low of 0.5 percent. Sterling continues to fall against the dollar on Friday, reverting to a trend that has seen the pound fall almost 7 percent in the past four months. A sustained break below key support $1.4115 level will drag the parity down at $1.4057 marks. A daily close above $1.4357 will take the parity up towards key resistances at $1.4504/$1.4602.
AUD/USD: The Australian dollar rose to $0.7714, near a 10-month summit of $0.7737 touched on Thursday. It has gained more than 2 cents this week, in part after the domestic jobless rate fell to 5.7 percent, the lowest since late 2013. Intraday bias remains bullish till the time pair holds key support at $0.7645 levels. On the downside, a sustained break below $0.7433 support levels will turn bias back to the downside for retesting 0.7365 low. Initial resistance is seen at $0.7774 levels.
NZD/USD: The New Zealand dollar rose 0.3 percent to $0.6876 after U.S. inflation proved softer than expected and so lessened the urgency for another hike by the Federal Reserve. New Zealand dollar erases previous loss against US dollar and trading around 0.6890 marks. Support was found at $0.6773. Resistance was seen at around $0.6970.
USD/CNY: The Chinese Yuan remains supported well above 6.48 marks even after the number of positive economic data from China. China’s GDP for the first quarter ticked lower to 6.7% from 6.8% previously, but industrial production for March swelled to 6.8% year-on-year from 5.9% booked in February. In addition, retail sales on a yearly basis for March decelerated from 11.1% to 10.5% but beat expectations and fixed-asset investments ex-rural jumped from 10.2% to 10.7% year-on-year.
Equities Recap
Japan's Nikkei 225 index was trading 0.56% in the red at 16,812.13 points in Tokyo on Friday morning, while the broader Topix index was down 0.35% at 1,366.49 points.
Korea's Kospi index slipped 0.22% to 2,012.84 points on Friday.
Chinese markets opened on a soft note, with the Shanghai Composite rising only 0.05% to 3,083.88 points and Hong Kong's Hang Seng index limping up 0.07% to trade at 21,323.86 points.
Australia's S&P/ASX 200 equity gauge swung 0.25% higher to 5,131.10 points on Friday morning in Sydney.
New Zealand's benchmark S&P/NZX 50 index traded little higher at 6,829.18 points on Friday afternoon in Wellington.
Commodities Recap
Crude futures were steady on Friday in thin business as traders were reluctant to take on new positions ahead of a planned meeting at the weekend of major oil exporters who want to rein in ballooning global over-production. Oil producers lead by top exporters Saudi Arabia and Russia plan to meet in Qatar on Sunday to discuss freezing output around current levels in an effort to contain a global supply glut that sees some 2 million barrels of crude produced every day in excess of demand. Brent crude futures were at $43.88 a barrel at 0449 GMT, 4 cents above their last close. U.S. West Texas Intermediate (WTI) futures were up 5 cents at $41.55.
Gold steadied on Friday after three days of declines, but was heading for its first weekly drop in three as strength in the dollar and global equities curbed appetite for the safe-haven metal. Bullion climbed to a three-week high on Tuesday but gave up those gains as world stocks rose to their highest levels since late December on Thursday, boosted by robust Chinese economic data and a surge in oil prices early this week.
Treasuries Recap
New Zealand government bonds gained, with yields moving 1 to 1.5 basis points lower across the curve.
Australian government bond futures extended losses, with the three-year bond contract off 4 ticks at 98.040. The 10-year contract shed 2 ticks to 97.4600, while the 20-year contract lost 1.5 ticks to 96.8800.
10-year US treasury yield at 1.790 percent vs US close of 1.781 percent on Thursday.
BOJ offers to lend Y 3 trln of JGBs on spot basis through 4/18 as a secondary source of JGBs.
